Hawaii legislators seek exemption from Jones Act's build requirement

Friday, March 22, 2013

Five members of Hawaii’s state legislature last week introduced resolutions (H.R. 119 and H.C.R. 150) calling on Congress to enact legislation to change the Jones Act so that ships operating between the U.S. mainland and Hawaii, Alaska and Puerto Rico do not have to be built in the United States.
Lead sponsor State Republican Rep. Gene Ward noted in a press release that foreign-built vessels are allowed in the domestic Guam trade, and said an exemption for cruise ships put in place in 2003 through efforts by the late U.S. Sen. Daniel K Inouye “revitalized Hawaii’s cruise ship industry and boosted our tourist economy.” Other sponsors of the bill are Reps. Lauren Kealohilani Cheape, a Republican, and John M. Mizuno, Cindy Evans, and Clift Tsuji, all Democrats.
“This exemption from the U.S. built requirement will become very important in Governor Abercrombie’s plans to switch from petroleum based fuels to Liquefied Natural Gas (LNG) for the purpose of electrical power generation," Ward said.
The press release said no U.S. shipyard has built LNG carriers since the 1970s. With the shutdown of Tesoro’s Hawaii refinery in April 2013 the release noted Hawaii Gas is losing its supplier of naphtha feed stock for the production of synthetic natural gas (SNG) and Hawaii Gas SNG customers will soon depend on recently-approved shipments of LNG carried in 40-foot refrigerated tank containers.
Ward said LNG carriers are required if LNG is to power the much larger demands of electricity generation.
The proposed exemption would not change the other requirements of the Jones Act, such as U.S.-flag, crew and ownership, and would not apply to the tug and barge industry, nor cause a loss of any maritime jobs in Hawaii or the other noncontiguous jurisdictions.
“The high cost of new Jones Act ships is the main cost driver in the noncontiguous trades and by allowing foreign built oceangoing ships operating under U.S.-flag into these trades we can substantially lower the shipowners’ capital costs and meaningfully increase competition that will assist all of the residents,” said Ward’s office in a statement. “This exemption would also not affect Matson has some of its ship repairs done in Asia rather than U.S. ports. This will not alter current ship repair operations.”
"We are looking forward to the legislatures of Alaska, Guam and Puerto Rico to join with us by passing complimentary resolutions supporting this important Jones Act exemption for all of us," Ward concluded.
Michael Hansen, president of the Hawaii Shipper’s Council, said his organization strongly supports the resolutions. The resolutions come as the General Accountability Office released a report on the Jones Act and its effect on Puerto Rico.
Pedro Pierluisi, Puerto Rico’s resident commissioner in the U.S. House, said after reading the report that he intended to introduce legislation to "enable foreign vessels to transport liquefied natural gas and other fuels from the U.S. mainland to Puerto Rico" and also "relax the Jones Act in the case of agricultural products shipped on bulk cargo vessels from the U.S. mainland to Puerto Rico." - Chris Dupin